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2. Data for Barry Computer Co. and its industry averages follow. The firm's debt is priced at par, so the market value of its debt equals its book value. Since dollars are in thousands, the number of shares is shown in thousands too.

Barry Computer Company:
Balance Sheet as of December 31, 2021 (in thousands)
Cash	$	93,600		Accounts payable	$	62,400
Receivables		212,160		Other current liabilities		56,160
Inventories		168,480		Notes payable to bank		68,640
Total current assets	$	474,240		Total current liabilities	$	187,200
				Long-term debt		187,200
Net fixed assets		149,760		Common equity (24,960 shares)		249,600
Total assets	$	624,000		Total liabilities and equity	$	624,000

Barry Computer Company: Income Statement for Year Ended December 31, 2021 (in thousands)
Sales			$	1,200,000
Cost of goods sold
Materials	$528,000
Labor	312,000
Heat, light, and power	48,000
Indirect labor	96,000			984,000

Gross profit		$	216,000
Selling expenses			120,000
General and administrative expenses			24,000
Depreciation			24,000
Earnings before interest and taxes (EBIT)		$	48,000
Interest expense			13,104
Earnings before taxes (EBT)		$	34,896
Federal and state income taxes (25%)			8,724
Net income		$	26,172
Earnings per share		$	1.0486
Price per share on December 31, 2021		$	11.00

Calculate the indicated ratios for Barry. Do not round intermediate calculations. Round your answers to two decimal places.

Ratio	Barry	Industry Average
Current		2.56
Quick		1.68
Days sales outstandinga	days	31	days
Inventory turnover		7.33
Total assets turnover		2.13
Profit margin	%	2.08	%
ROA	%	4.41	%
ROE	%	11.15	%
ROIC	%	7.90	%
TIE		3.57
Debt/Total capital	%	52.12	%
M/B		4.10
P/E		13.03
EV/EBITDA		8.70

^aCalculation is based on a 365-day year.

Construct the DuPont equation for both Barry and the industry. Do not round intermediate calculations. Round your answers to two decimal places.

	FIRM	INDUSTRY
Profit margin	%	2.08%
Total assets turnover		2.13
Equity multiplier

Select the correct option based on Barry's strengths and weaknesses as revealed by your analysis.

The firm's days sales outstanding ratio is more than twice as long as the industry average, indicating that the firm should tighten credit or enforce a more stringent collection policy. The total assets turnover ratio is well below the industry average so sales should be increased, assets decreased, or both. While the company's profit margin is higher than the industry average, its other profitability ratios are low compared to the industry - net income should be higher given the amount of equity, assets, and invested capital. Finally, it's market value ratios are also below industry averages. However, the company seems to be in an average liquidity position and financial leverage is similar to others in the industry.

The firm's days sales outstanding ratio is more than twice as long as the industry average, indicating that the firm should loosen credit or apply a less stringent collection policy. The total assets turnover ratio is well below the industry average so sales should be increased, assets increased, or both. While the company's profit margin is higher than the industry average, its other profitability ratios are low compared to the industry - net income should be higher given the amount of equity, assets, and invested capital. However, the company seems to be in an average liquidity position and financial leverage is similar to others in the industry.

The firm's days sales outstanding ratio is less than the industry average, indicating that the firm should tighten credit or enforce a more stringent collection policy. The total assets turnover ratio is well below the industry average so sales should be increased, assets decreased, or both. While the company's profit margin is lower than the industry average, its other profitability ratios are high compared to the industry - net income should be higher given the amount of equity, assets, and invested capital. However, the company seems to be in an average liquidity position and financial leverage is similar to others in the industry.

The firm's days sales outstanding ratio is more than the industry average, indicating that the firm should tighten credit or enforce a more stringent collection policy. The total assets turnover ratio is well above the industry average so sales should be increased, assets increased, or both. While the company's profit margin is higher than the industry average, its other profitability ratios are low compared to the industry - net income should be higher given the amount of equity, assets, and invested capital. However, the company seems to be in an above average liquidity position and financial leverage is similar to others in the industry.

The firm's days sales outstanding ratio is comparable to the industry average, indicating that the firm should neither tighten credit nor enforce a more stringent collection policy. The total assets turnover ratio is well below the industry average so sales should be increased, assets increased, or both. While the company's profit margin is higher than the industry average, its other profitability ratios are low compared to the industry - net income should be higher given the amount of equity, assets, and invested capital. However, the company seems to be in a below average liquidity position and financial leverage is similar to others in the industry.

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